Apple Results In Line, But iPad Sales Slow
Do you love Apple? Or hate it passionately? Apple Inc. seems to have taken over Microsoft’s position as America’s favorite Love-Hate company, for both investors and for consumers. Today, people seem a little conflicted.
Apple’s shares were little changed in premarket activity after the company reported solid earnings in a report that, nevertheless, created some caution in the minds of investors. The tech giant said its profits rose 12 percent, helped by strong sales of the iPhone ahead of an expected upgrade of the model.
However, it also said that its iPad sales declined again – as analysts began questioning whether the device has a future at a time when smart-phone are becoming more Internet-friendly with screens that are bigger and prettier to look at.
Apple’s fiscal third-quarter profit rose to $7.75 billion from $6.9 billion in the year-ago period. Per-share earnings were $1.28, beating analyst expectations and up from $1.07 a year earlier. Revenue was up 6 percent to $37.43 billion.
It said it sold 35.2 million iPhones, up nearly 15 percent from a year earlier, boosted by sales in BRIC countries – Brazil, Russia, India and China, where iPhone sales rose 55 percent.
iPad sales were 13.3 million, down 9 percent from the same period a year ago. Chief Executive Tim Cook told analyst that he was happy with iPad sales, adding that it “met our expectations, but not yours.”
Piper Jaffray Managing Director Gene Munster told CNBC that he was reassured by Apple’s gross margins for the quarter, noting that a year ago investors were “petrified that gross margin was going to perpetually decline.”
“What’s ended up happening is they ended up beating it … it’s going to give investors some confidence over the next few quarters,” he said.
Apple forecast gross margins of between 37 and 38 percent for the fiscal fourth quarter on revenue of $37 billion to $40 billion.
OK, now to give equal time for Microsoft Love-Haters …
Microsoft Profit Fails to Meet Analyst Expectations
Microsoft posted a net profit of $4.61 billion for its fiscal fourth quarter, a hefty number but down from a year ago and below analyst consensus. It had per-share earnings of 55 cents, down 4 cents from a year earlier and also short of analyst expectations of about 60 cents a share.
This being the end of the company’s fourth fiscal quarter, the full-year numbers were also posted. Microsoft had revenue of $86.8 billion, up 11.5% and had net profit of $22.07 billion, with EPS of $2.63. It earned $21.86 billion in the previous year.
This was Microsoft’s first earnings report since its $7 billion acquisition of Nokia’s handset operation. While it could benefit it in the long run for the deal, these results were weighed down by expenses and continued losses at the unit. Excluding the Nokia-related items and taxes, profit would have been 66 cents a share.
“Nokia continues to be the black cloud over Microsoft,” said Daniel Ives, an analyst at FBR Capital Markets & Co., told Bloomberg. Microsoft said the business hurt its operating income by $692 million for the quarter.